Today I learned about the petrodollar and how it’s usage is declining.
In short, an agreement dating back to the 70s means oil-producing countries sell oil in dollars, driving up demand for the currency. The dollars are then recycled by purchasing weapons or treasury bills from the US. It provides the US with a carefully crafted strength.
The network effects kick in because the cost of a country doing business differently is a deterrent. Essentially, you want to be part of the club and while the upside may be average, the downside can be limitless due to the powerful adversaries one would make.
The PetroYuan is increasing it’s dominance. It’s frightening to think about the conspicuous forms of the inevitable clash